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In contrast to the bleak mood in much of France right now, optimism and ambition fill the air at the business incubator at the underground station F in Paris. In the year Since opening in 2017, the world’s largest startup campus has grown 7,000 businesses, including two unicorns: AI company Hugging Face, now based in the US, and healthcare insurer Alan.
Talk to founders of AI companies at Station F and it’s hard to resist their enthusiasm for starting a company with the potential of the technology and the attractions of France. From the incubator 40 best startup startups34 have AI at the core of their work. The Mistral emerges quickly, The Paris-based AI startup, which is now valued at $6 billion and has developed one of the most impressive foundation models in the world, has also caused a lot of excitement.
“Europe can create competitive AI models today,” said the French investor at Station F and Mistral. Recently for FT. I think we can create big things with a few hundred million euros.
A lot is going on in the French startup world. The country’s education system trains an endless chain of qualified engineers. Paris rivals London as Europe’s top AI hotspot. French business culture has changed over the past two decades, making it acceptable, even fashionable, to be an entrepreneur. Venture capital is more readily available than ever before. President Emmanuel Macron has been an active champion of the sector, despite his struggles elsewhere.
Unlike most US AI companies, French AI startups favor open-source models that encourage greater collaboration and wider access to the technology. They hope that will give them a competitive edge in applying AI to almost every sector of the economy.
But the question remains: Can France’s vibrant tech sector overcome the political chaos and economic uncertainty that is affecting the rest of the country?
The young startup founders of Site F have a few doubts. Historically, French entrepreneurs have been more successful at building companies in the U.S. than in France, but that is changing now, said Thomas Le Corré, CEO of edtech startup Racono. He studied at the HEC Business School in Paris and the University of California, Berkeley. “I believe in European technology,” he said.
The country’s abundant technical skills are perfectly aligned with the AI ​​industry, making France a great place to build a technology business, added Biolevat CEO Joel Belafa. “For a long time, France has built a culture of engineering,” he said. Similarly, he estimates that qualified engineers in the white US market can be worth five to eight times as much.
Still, the boom in France’s tech sector slowed last year, in part because of political unrest. A divisive parliamentary election. Data from RefinedThe FT’s sister publication said the French startup had revenues of just €3bn in the second half of 2024, down from €5.9bn in the first six months. The latest Global Startup Ecosystem Index In the year It makes France the eighth most successful startup country in the world, up from 12th in 2020, but still ahead of the UK, Sweden and Germany in Europe.
No matter how advanced the French tech sector is, the US still exerts a powerful gravitational pull. Paris AI startup road announced last month It had to move its headquarters to the United States to cater to its larger customers. “We need to be in the room where it’s happening — and it’s happening in the Bay Area,” said Zuzana Stamirovska, co-founder of Pathway.
Just like Britain’s DeepMind was bought by Google in 2014, rumors are swirling around Paris that Mistral may have to sell its assets to the US giant if it wants to gain global importance.
Unlike their competitors in the post-Brexit UK, French AI startups have to contend with the heavy regulatory burdens of EU AI legislation. But some entrepreneurs argue that the law will help build trust and boost innovation. “This is not only negative for Europe. It can drive better innovation,” said Samuel Bismuth, founder of software license management company Corma.
Without such optimism and ambition, little can be achieved. But having benefited from some helpful tailwinds over the past few years, France’s tech sector is now experiencing strong headwinds. This year will test France’s entrepreneurial potential more than ever.
